Tucson economy sees strongest growth since the recession

The Tucson area could see job growth double this year from 2015 levels, signaling the region’s belated emergence from the Great Recession.

Tucson should see about 1.7 percent job growth by year’s end, and wages could pick up as well, said George Hammond, director of the Economic and Business Research Center in the Eller College of Management at the University of Arizona.

The region has done notably better in recent months and is now hurt less by government cutbacks in defense contracting and in higher education, he said.

“We’re seeing the strongest growth since before the Great Recession,” Hammond said in an interview before the Eller school’s annual economic forecast Wednesday.

The upswing in Tucson has gained momentum only after the Phoenix area has recovered the jobs it lost during the downturn. These days, however, the Old Pueblo is finally seeing evidence of a more durable economy.

Hammond thinks the area should add about 6,400 jobs. By comparison, last year it gained about 2,900, or 0.8 percent. In recent months, the Tucson area has seen 12-month job growth approaching 3 percent and rivaling the Phoenix region.

George W. Hammond, director of the Eller College of Management at the University of Arizona, sees a rosy picture for the Tucson economy. (Photo: Handout)

What’s more, the jobs that have grown most over the past year typically pay above-average wages. The five fastest-growing industries in Tucson have average wages higher than the area as a whole.

By the end of 2018, the Tucson area should gain more than 5,000 jobs in private education and health care, about 3,500 in the hospitality industry and nearly as many in professional and business services. The mining industry, hurt by the global collapse in copper prices, is expected to continue cutting jobs in the near-term.

Although Tucson’s immediate future seems better than its recent past, Ross DeVol, chief research officer of the Milken Institute, said the longer term is hampered by the state’s continued underinvestment in higher education.

DeVol said his research finds that adding one year of college to a region’s work force yields an extra 17 percent in per capita economic output for everyone in that metro area.

With pleasant winters, affordable housing and a decent quality of life, Arizona does reasonably well in attracting out-of-state workers, and Tucson has the most educated workers on average in the state, DeVol said.

“But when you look at the rate of creating people with post-secondary education, Arizona as a whole does not perform as well,” he said. “It’s a missed opportunity. It’s important to remember that higher education is an investment in economic growth.”